In the 1890s, the western portion of the neighborhood was known as Fulton Landing, after the ferry stop that connected it to Manhattan before the Brooklyn Bridge opened. At that time, it was primarily a manufacturing district, with warehouses and factories that made machinery, paper boxes and Brillo soap pads. The area has been known, variously, as Rapailie, Olympia, and Walentasville.[4] The cardboard box was invented in the Robert Gair building on Washington Street by Robert Gair, a Scottish emigrant; because of Gair's fame, the area was known as Gairsville for a long time.[4] The Gair building is now home to Etsy.[5]

With deindustrialization it began becoming primarily residential, when artists and other young homesteaders seeking relatively large and inexpensive loft apartment spaces for studios and homes began moving there in the late 1970s.[3] The acronym Dumbo arose in 1978, when new residents coined it in the belief such an unattractive name would help deter developers.[3]

Near the end of the 20th century, as property became more and more expensive in Manhattan, Dumbo became increasingly gentrified. Still, by 1997, the acronym Dumbo was largely unknown, and the area itself was very inclusive, serving mainly as an enclave for artists located along the East River and under the Manhattan Bridge. There were still many air conditioner repair shops, auto shops, and "seedy back alleys and wharves"; however, as the neighborhood was still gentrifying from an industrial district, it lacked even a bookstore, coffee shop, or laundromat at the time.[6]

Joy Glidden is the Founding Director of the Dumbo Arts Center (DAC) and co-founder of the Dumbo Art Under the Bridge Festival, where she served as the Executive Director from 1997-2006. Using art as a catalyst for change, Glidden's efforts achieved successful development in Dumbo, which is now a model for similar waterfront developments around the world.[7] Glidden stated, of Dumbo's gentrification, "'It may be one of the last of what could be considered a true arts community in New York."[6]

The area has emerged as one of New York City's premier arts districts, with a cluster of for-profit art galleries such as the Klompching Gallery and such not-for-profit institutions as the St. Ann's Warehouse and the A.I.R. Gallery.

Dumbo has New York City's highest concentration of technology firms by neighborhood.[5] Dumbo is home to 25 percent of New York City-based tech firms. Within a 10-block radius are 500 tech and creative firms that employ over 10,000 people.[5]

The City of New York, in conjunction with New York University, installed an incubator in Dumbo to support development of tech start-ups.[5] Dumbo's average office rent of $25 per square foot makes it more attractive to start-ups than Manhattan, where rents average $40 per square foot in 2013.[5]

Jerry Seinfeld referred to Dumbo on a late-night talk show appearance, joking that it stands for "Down Under Manhattan Bridge", but that New Yorkers added the "O" at the end because they did not want to live in a neighborhood called "Dumb".[19]

It is the residence of the Humphrey family on the television series Gossip Girl. The view from Washington Street appears very often to inform the viewer of the scenario change from Manhattan to Brooklyn.

^Dumbo - Soul of Brooklyn. "The DUMBO Arts Center was founded by Joy Glidden and under her direction from 1997-2006 has helped to establish a successful model for waterfront development that has been referred to and used internationally". Retrieved June 12, 2014.